Silicon Valley Giant Plans Largest-Ever Fund for AI Investments

A16z typically raises multiple smaller, focused funds. This time, they're going all-in on AI with a single massive vehicle. The timing is notable. A16z's founders recently backed Trump, breaking with Silicon Valley's traditional Democratic leanings. Their Trump connection could help attract foreign investors looking for an easy path into U.S. tech investments.

The fund would dwarf most competitors. Only SoftBank's Vision Funds, at $100 billion and $56 billion, surpass it. A16z's previous largest fund was a mere $5 billion.

The firm plans to funnel money into AI companies building large language models. These startups burn through cash, needing expensive computing power and data. A16z already backs several heavy hitters, including Elon Musk's xAI and Databricks.

A16z started in 2009 with a $300 million fund - huge at the time. They disrupted venture capital by raising bigger funds and outbidding traditional investors. Now they manage $45 billion.

The firm provides more than just money. They employ a small army of support staff to help portfolio companies. In a savvy move, they recently assembled thousands of coveted Nvidia GPUs to rent to AI startups.

This fund represents a massive bet on AI's future. It also tests whether venture capital can maintain strong returns at this unprecedented scale.

Why this matters:

• The fund's size suggests AI startups will keep burning cash at astronomical rates - welcome news for GPU makers and cloud providers
• A16z's Trump ties highlight how politics and tech investing are becoming increasingly entangled in the AI gold rush

Read on, my dear:

• Reuters: Exclusive: Andreessen Horowitz seeks to raise $20 billion megafund amid global interest in US AI startups